What is a reaffirmation agreement in Chapter 13 Bankruptcy?

A reaffirmation agreement in Chapter 13 Bankruptcy is a voluntary agreement between the debtor and a creditor that allows the debtor to keeping a specific piece of collateral, such as a car, even though they are filing for bankruptcy. In the agreement, the debtor agrees to remain liable for the debt even though they may be receiving a discharge of most or all of their debts through the bankruptcy. The decision to enter into a reaffirmation agreement can be an important one for the debtor to make. If the debtor reaffirms a particular debt and fails to make the payments, the creditor can take the collateral away from the debtor. Also, when the debtor reaffirms a debt, they are legally obligated to make the payments, even if they are discharged from their debts in the bankruptcy. In the state of Virginia, any reaffirmation agreements that are entered into must be approved by the court. If the debtor is represented by an attorney, the attorney will review and approve the agreement. The court will also review the agreement to make sure it is in the best interests of the debtor. Reaffirmation agreements can be beneficial to the debtor if they need to keep a piece of collateral in order to continue their lives without the burden of the debt. They can also provide the creditor with some confidence that the debt will be repaid and that their collateral will be secured.

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